Slow down in consumer lending
New figures from the Bank of England appear to show that the boom in consumer credit is easing.
Though the total debt is still hovering above the symbolic one trillion pound mark, July saw a slow down in growth.
Total lending grew by £10.4 billion, or one per cent in July, but this was £1.1 billion weaker than the increase in June.
There was also a fall in the number of loans approved for house purchases in July, down 22,000 from the previous monthly average, 97,000 as opposed to 119,000.
Liberal Democrat treasury spokesman, Vince Cable, who has been campaigning vociferously on the issue of personal debt, whilst welcoming the slow-down called on the Bank of England to act on “irresponsible” lending.
Dr Cable stressed that the total debt was still up by £10.4 billion, saying: “It is very clear from the Bank of England’s most recent inflation report that the most serious risks to the economy are a sharp fall in house prices, rising interest rates and other adverse economic conditions all of which would lead many into financial difficulty.
“It is essential that banks do not continue to give incentives to employees to sell borrowing as such policies can encourage them to give loans to those who may be unable to repay them.”
The base rate currently stands at 4.75 per cent, having been raised five times since November 2003.
Tuesday also saw the publication of the Confederation of British Industry’s (CBI) retail trends survey, which reported the slowest sales performance since March 2003.
34 per cent of firms said sales were up on a year ago while 32 per cent said they were down, leaving a plus two balance, the lowest since March 2003 when sales were in decline.
CBI director general, Digby Jones, said: “This is the second successive survey to report an unexpected slowdown in sales. It’s true that the weather can influence shopping patterns but it seems more likely that consecutive interest rate rises are having an impact on spending.
“If the Bank of England’s strategy of gently slowing consumer spending is working, further rate rises could be put on hold.”
